Who Gets the Carrot and Who Gets the Stick? Evidence of Gender Disparities in Executive Remuneration.

Abstract

This paper offers a new explanation of the gender pay gap in leadership positions by examining the relationship between managerial bonuses and company performance. Drawing on fi ndings of gender studies, agency theory, and the leadership literature, we argue that the gender pay gap is a context-specifi c phenomenon which results partly from the fact that company performance has a moderating impact on pay inequalities. Employing a matched sample of 192 female and male executive directors of UK listed fi rms we corroborate the existence of the gender pay disparities in corporate boardrooms. In line with our theoretical predictions, we fi nd that bonuses awarded to men are not only larger than those allocated to women, but also that managerial compensation of male executive directors is much more performance-sensitive than that of female executives. The contribution of attributional and expectancy-related dynamics to these patterns is highlighted in line with previous work on gender stereotypes and implicit leadership theories such as the romance of leadership. Gender differences in risk-taking and confi dence are also considered as potential explanations for the observed pay disparities. The implications of organizations' indifference to women's performance are examined in relation to issues surrounding the recognition and retention of female talent.

Us knows us in the UK: On director networks and CEO compensation

“…For instance, Bertrand and Hallock (2002) find that female top executives are earning 45% less than their male colleagues in large American companies. Kulich et al (2011) confirm that only 3% of the executive board members are female in all listed UK firms and receive lower compensation than their male counterparts. In addition, compensation contracts of female managers are less performance-sensitive than those of male executives: female managers' remuneration packages have less upward potential in case of good corporate performance, but they lose less in case of poor performance.…”

Is there a gender gap in CEO compensation?

“…Alternative specifications of model (1). Kulich et al (2011) find that in the UK there is a higher pay for performance sensitivity for male executives than female executives. To examine if a similar relationship exists for female CEOs in the US, we introduce into regression model (1) an interaction variable between Fem_CEO and both the stock return (RET) and accounting measure (ROA) of performance.…”

Women at Work

“…Even after reaching this level of leadership, men and women do not receive equal pay. Among 192 male and female executive directors of U.K.-listed firms (Kulich, Trojanowski, Ryan, Haslam, & Renneboog, 2011), male directors received larger bonuses than female directors (a difference of £10,000 or 36%), after controlling for company size, risk level, board tenure, and firm performance.…”